Nasdaq OMX Group (Nasdaq:NDAQ) today announces it has entered into Memorandum of Understanding agreements with Central Counterparty (CCP) clearing service providers SIX x-clear and EuroCCP in order to support a competitive clearing model on its Nordic markets.
In January 2009 NASDAQ OMX announced its intention to seek additional CCP partners that fulfill the Nordic markets requirements. As a result of the pending agreements with SIX x-clear and EuroCCP, trading participants will be able to select CCP clearing from their choice of service providers. This multiple CCP model will contribute to the long-term competitiveness of NASDAQ OMX Nordic Markets.
"Through these agreements, we are acting on our outlined strategy to increase market liquidity by building an open, competitive CCP model in the Nordics," says Hans-Ole Jochumsen, President of NASDAQ OMX Nordic. "The ability to choose a CCP will allow price and service advantages to our customers, and ultimately drive trading velocity on our Nordic markets."
On October 9th, 2009, NASDAQ OMX will introduce mandatory CCP clearing on its Nordic markets through its first CCP service provider EMCF (European Multilateral Clearing Facility).
Central counterparty clearing refers to a method of clearing trades where the clearing firm acts as an intermediary between every buyer and seller, with all participants serving as counterparties. With the CCP backing all transactions, counterparty risk -- or the risk that one party to a trade suffers losses because the other party cannot fulfill its obligations -- is mitigated.
The additional availability of CCP services from SIX x-clear and EuroCCP on NASDAQ OMX Nordic markets is conditional on FSA approval of Interoperability Agreements between EMCF and SIX x-clear and EuroCCP.
Marco Strimer, CEO of SIX x-clear commented, "We are pleased to enter this agreement with NASDAQ OMX as it continues our philosophy of interoperability and competition. This, we believe, provides participants with greater choice and creates a more efficient and cost effective post trade infrastructure bringing benefits to all."
Diana Chan, Chief Executive Officer of EuroCCP, added: "NASDAQ OMX's decision to pursue a multiple CCP model for its Nordic markets marks an important step forward in the development of interoperability and competition between CCPs, something that EuroCCP strongly supports.
Market participants will be able to use the CCP of their choice.
Everyone at EuroCCP is eager to launch operations in this market."
Jan Booij, CEO of EMCF, said, "We look forward to working with other CCPs for a successful implementation of competitive clearing in the Nordic markets. Interoperability between CCPs is the way forward and will create a sound foundation for efficient post-trade operations in the European securities markets."
Interoperability between clearing houses allows markets to interact with multiple clearing houses to clear and settle their trades, increasing competition and lowering costs for investors. CCP interoperability enables cross netting of trades and provides significant cost savings to investors by eliminating the need to pay a clearing fee on both the opening and the closing of a transaction.